Transcription is temporally and spatially regulated via changes in chromatin structure. Gene regulation via formation of transcriptionally active or inactive chromatin is stable' d to be a cellular memory system that is responsible for the inheritance of gene activity to progeny cells. In quiescent cells, these mechanisms appear to be involved in stable long-term repression of a variety of genes, which are responsible for cell proliferation. Indeed, such sealing of "unnecessary" genes is crucial for maintaining the quiescent state. Accordingly, any defect in such silencing mechanisms results in the expression of "unnecessary" genes in quiescent cells, leading to tumorigenesis. While many factors that are responsible for silencing have been identified by genetic screening, mechanisms by which they contribute to the formation of inactive chromatin remain largely unclear. To explore these mechanisms, we have purified a key protein complex that plays important roles in the formation of inactive chromatin in quiescent cells. Further characterization of this complex will provide new insights into mechanisms by which normal cells maintain the quiescent state, and further, by which transcription is perturbed in tumor cells. Moreover, we will investigate how the patterns of transcriptional activity are transmitted to progeny cells. Several lines of evidence suggest that histone H2AZ, a major histone variant that occupies 5% to 10% of total H2A, is deposited onto transcriptionally active chromatin. To reveal mechanisms by which histone H2AZ is incorporated into active chromatin and contribute to gene activation, we have purified at least two H2AZ-containing complexes. Functional analyses of these complexes will solve, at least in part, the puzzle of how histone H2AZ exerts its specific and diverse effects to transmit the patterns of transcriptionally active chromatin to progeny cells.